JERUSALEM (Jul. 20)
The government’s new fiscal measures were approved by the Knesset last night. The vote was 60-35 with one abstention. The Democratic Movement for Change (DMC) voted with the government, leaving only the Labor Alignment and some smaller factions in opposition.
The Knesset also defeated two no-confidence motions based on the fiscal measures, which were presented by the Popular Front for Peace (Rakah Communists) and the leftist Sheli faction. The Labor Alignment abstained on both motions.
The vote was taken seven hours after Finance Minister Simcha Ehrlich, who is acting Premier in the absence of Menachem Begin, presented the fiscal plan. He said it was essential for the American President and the American people to know that at a time when they are studying Israel’s problems, including those related to the economy and security, that the Israeli people were, first and foremost, making demands on themselves.
The fiscal measures called for drastic reductions in government spending including slashes in the defense budget and curtailment of government subsidies for basic goods and services. They will result in an immediate 25 percent increase in prices.
Ehrlich said he has appointed a joint committee of representatives of the finance and Welfare Ministries, the National Insurance Institute and the Bank of Israel to calculate the exact compensation for low income families to cushion the impact of higher prices.